The loans which have a protection by an asset or collateral are named as secured loans. A purchased item, a house for example, is able to be used as collateral. The bank has the rights of this collateral until the repayment is made in full. Other kinds of personal property, like bonds, can be used to secure a loan. Those kind of loans are generally used to obtain quick money as the loan process is shortened through the guarantees made by the borrower. As the promises are made for highly valuable assets, lender is more likely to believe that borrower will do whatever he needs to keep it.

Secured loans do not have to be for purchasing purposes. They can be home equity loans, second mortgages or home equity lines of credit.

A kind of secured loans is debt consolidation loans which use a personal property as collateral. It reduces the number of payments, even to a single payment per month. As secured loans have lower interest rates compared to other kinds of loans, the borrower will save money. Those kind of loans has lower monthly payments most of the time. The loans in which there are no collateral involved are called unsecured loans and they demant higher interest rates as lender makes a riskier move giving such a loan. In a situation of rejection for an unsecured loan, you can have a secured loan.